January 23, 2022

Bounced Checks: What You Need to Know

When you bounce a check, it means that you wrote a check that the bank couldn’t process. Typically, it’s because you didn’t have enough funds in your checking account to cover the full amount of the check.

It can also happen when the check writer’s account is closed, he or she requests a “stop payment,” or the check turns out to be fraudulent.

Writing a check that bounces – as well as trying to cash one – can cost you. Read on to learn how to avoid bounced checks and minimize their effects.

What Fees Will You Pay for a Bounced Check?

If you bounce a check, it can be costly. For one, you will likely be charged a fee by both the bank and the vendor/company you wrote the check to. Fees are high for bounced checks in most cases, too. Alexa Serrano, banking editor for Finder.com, says this fee can be as high as $35 or more. Returned check fee maximums vary by state. For example, in Colorado and Utah, the maximum is $20. But in Florida, the maximum could be 5% of the check amount if it’s more than $800.

Serrano also warns that you need to pay that fee on time or else your bank could close your account. The receiver of your bounced check can also incur a fee from their bank.

However, there is the possibility that your bank may not charge for a bounced check. Reflecting a trend in which some banks are eliminating overdraft fees, Bank of America, the country’s second-largest bank, announced in January that it no longer will impose fees for bounced checks.

If you have a history of bouncing checks, your bank may report this information to ChexSystems, a consumer reporting agency. That could prevent you from opening bank accounts at other banks that use ChexSystems to make account decisions, says Leslie H. Tayne, a debt resolution attorney and founder of Tayne Law Group, headquartered in New York.

Similarly, if you write checks that bounce at retailers or other businesses, it may be reported to TeleCheck, which many stores use to prevent individuals from paying with bad checks.

How Can You Prevent Bounced Checks?

The easiest way to prevent bounced checks is making sure you’ll have enough money in your account when the check is deposited and by balancing your checkbook each month, Tayne says. “You can check with the bank to be sure the funds are sufficient in the account, and you can also get overdraft protection on your account, which allows for a safety net in case the account does not have enough money.”

And though it may be tempting, don’t count on uncashed checks to free up money in your account for other expenses. “Make sure you have enough funds to cover your regular expenses and the costs you’re paying for,” Serrano says.

Because it’s tough to control when a check is actually cashed by the recipient, Tayne suggests instead using a money order or cashier’s check, which are both prepaid by the individual sending the money. That way, you don’t have to wonder if you’ll still have enough money in your account by the time it’s cashed. If you’re the receiver of the money order or cashier’s check, you can trust that the funds will be there when you go to cash it.

What Should You Do if You Bounce a Check?

Here are some steps to take when dealing with bounced checks:

  • Let the recipient know as soon as possible. “Request to remit payment again, so long as there are now sufficient funds in the account to cover not only the payment, but the fees from the bank,” Tayne says.
  • If this is a rare event for you, she suggests contacting the bank and asking it to reverse the fees. The bank may decide to cut you a break for a one-time incident.

If you received a bounced check

  • Tayne says you should contact the person who wrote the check and ask them to pay you again, including the nonsufficient funds fee that your bank charged you. “If you are given another personal check to cash, you can bring it to the bank listed on the check and ask if there is enough money in their account to cash the check,” Tayne says. “If so, you can cash it on the spot without fear that the check will bounce again.”
  • If the person who wrote you the bad check refuses to make it right, you can send a certified letter demanding payment.
  • If that person received goods or services, you might be able to file a police report. “If you don’t hear back after sending the certified letter, you can get in touch with the local district attorney and request prosecution. Navigating this legal landscape can be challenging, so it’s always a good idea to get recommendations from those you trust for a local attorney that can explain your legal options,” Tayne says.

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